Mayor tells Chamber C.E.O. let’s “get on the same page”

City of Myrtle Beach Mayor Brenda Bethune reminded Myrtle Beach Area Chamber C.E.O. Karen Riordan that in previous meetings the city and the chamber had discussed priorities. The two entities are working to “get on the same page” for the upcoming 2024 S.C. legislative agenda to present to the General Assembly in Columbia, S.C.

The Mayor’s comments to the Chamber C.E.O. can be heard in the 43 second video above.

GETTING ON THE SAME PAGE

MyrtleBeachSC News spoke with members close to the Myrtle Beach Area Chamber of Commerce asking what the mayor’s comments meant?

Certain key elected officials and key members of MBACC have been meeting for months discussing the conversion of the TDF (Tourism Development Fee), (which brings in over $24 million annually to MBACC in S.C. city collected taxes), to a brand tax that would primarily go directly to the City of Myrtle Beach.

During some peak summer weeks in 2023, businesses inside the City of Myrtle Beach were down 20% despite MBACC spending $54 million in tax gifts to promote the area.

Most city leaders believe that portions of those tax dollars could be better spent in improving the city’s infrastructure. Fixing issues like storm water, street lighting, and structural improvements would upgrade the downtown appearance, creating a more inviting place for tourists.

Elected Council members and Mayor Bethune believe the TDF expenditures on advertising are subject to a law of diminishing marginal returns.

WHAT IS THE LAW OF DIMINISHING MARGINAL RETURNS?

The law of diminishing marginal returns is an economic concept that states that as a producer increases the amount of a single input while keeping all other inputs constant, there will come a point where the additional dollars gained from each additional ad unit will start to decrease. In simpler terms, it suggests that there is a limit to how much benefit can be obtained from adding more of a particular input, such as advertising dollars, in producing more tourists.

Think of it like plating tomato seeds in a small pot.

If you plant one tomato seed in a small pot, you are almost certain to get one tomato bush. Plant two seeds and you are likely to get 2 bushes. Plant 100 seeds, however, and it is simply impossible for the pot to sustain 100 bushes.

Initially, as more additional ad dollars are spent, the total output increases at an increasing rate, known as the stage of increasing marginal returns. This occurs because the added input complements the existing ones, leading to greater efficiency and productivity. However, beyond a certain point, the law of diminishing marginal returns comes into play.

During the stage of diminishing marginal returns, the total output in ad expenditures continues to increase, but tourists respond at a decreasing rate. This decline occurs because the fixed factors of the population of eastern tourists interested in Myrtle Beach vacations, the capacity of hotel rooms July 4th week, restaurants, and entertainment venues become limited compared to the additional ad dollars being increased. This imbalance creates inefficiencies and eventually causes the additional ad spends to contribute less and less additional tourists.

In extreme cases, during the stage of negative marginal returns, further increases in the input will actually result in a decrease in total output. This happens when the ad spends create overcrowded demand during peak weeks, leading to conflicts, bottlenecks, or diminished quality.

Understanding the law of diminishing marginal returns is essential for decision-making in how much the Chamber C.E.O. should spend at top end.

THE LEGISLATIVE PIECE

For the city to legally convert this tax, the S.C. General Assembly must approve the change.

But before that can happen, the city and the Chamber C.E.O. must agree that funds should be diverted. They must agree on how much of the funds should be diverted.

On the same day the mayor challenged Karen Riordan, MBACC C.E.O., the Myrtle Beach Area Chamber of Commerce was also sued for surreptitious political contributions.